What Is The Cost of Bankruptcy?

Filing for personal bankruptcy in Quebec is an important decision that raises many questions, particularly about the costs and financial consequences. Contrary to popular belief, bankruptcy is not free: the cost is governed by law and depends on your personal situation (income, assets, debts).

In this article, we explain in detail how much bankruptcy costs in Quebec, how payments are calculated and what alternatives can be considered.

The basic costs of personal bankruptcy

Bankruptcy is a legal procedure governed by the Bankruptcy and Insolvency Act and administered by a Licensed Insolvency Trustees. The trustee's fees are set by the federal government, which ensures transparency and uniformity across Canada.

• The minimum cost of a bankruptcy is usually around $1,800, payable in monthly instalments.

• This amount covers the management of your file, mandatory meetings with the trustee and legal procedures.

• In most cases, these fees can be spread over 9 to 12 months, depending on your ability to pay.

Surplus income

Surplus income plays a part in calculating the real cost of a personal bankruptcy. When your income exceeds a threshold set by the government, you are required to remit a portion of that surplus to your creditors. For example, a single person whose net income exceeds approximately $2,600 per month will have to pay 50% of the excess amount as part of their bankruptcy.

The higher your income, the higher your monthly payments, which can make the total cost of bankruptcy vary considerably, depending on your salary, your family expenses and your essential expenses.

How much does a trustee in bankruptcy cost?

There are two types of bankruptcy: summary bankruptcy and ordinary bankruptcy.

• Summary bankruptcy applies to the majority of personal cases, where the value of realisable assets is less than $15,000.

• Ordinary bankruptcy concerns companies or individuals whose realisable assets exceed this threshold.

In a summary bankruptcy, administrative costs represent a percentage of the value of the assets disposed of, apportioned in accordance with section 128 of the BIA :

• 100% on the first $975

• 35% up to $2,000

• 50% on the remainder over $2,000

These fees are deducted before any distribution to creditors. In an ordinary bankruptcy, the trustee's fees correspond to approximately 7% of the value of the assets realised, with certain additional fees possible depending on the complexity of the case.

Bankruptcy or alternative? Mallette guides you

The cost of bankruptcy in Quebec depends on several factors: your income, your assets and the type of bankruptcy (summary or ordinary). Thanks to the Bankruptcy and Insolvency Act, the trustee's fees are transparent and included in your monthly payments.

At Mallette, our trustees evaluate your situation free of charge to determine the best strategy for reducing your debts. With over 40 offices in Quebec, we provide you with human and professional support to help you regain your financial stability.